The debate over whether corporations and large businesses are paying their fair share in taxes continues to be a contentious topic. Progressive groups have consistently called for these entities to contribute more, yet few examine what they already pay.
A recent report by the Council on State Taxation (COST), titled "Wearing Blinders in the Debate Over Business’s ‘Fair Share’ of State Taxes," challenges this narrative. The report, authored by Karl A. Frieden, vice president and general counsel for COST, aims to provide data-driven insights into the issue.
"This report isn’t about politics or ideology, it’s simply about facts, data and context," said NJBIA Chief Government Affairs Officer Christopher Emigholz. He emphasizes that those who blame corporations for economic issues may not fully understand the data.
Key findings from the COST report include that businesses paid over $1.07 trillion in U.S. state and local taxes in FY22, marking a 13.7% increase from FY21. Additionally, business tax revenue made up 44.6% of all state and local tax revenue during that period.
Frieden's report counters the perspective of some state and local tax experts who argue that tax systems favor businesses. He states, "(Their) perspective that the design of total state and local taxes is tilted in favor of business is demonstrably false."
In New Jersey specifically, Emigholz highlighted that corporations bear 45.3% of the state's total tax burden compared to an average of 40% elsewhere in the U.S. New Jersey businesses paid $34.1 billion in state and local taxes in FY22.
Frieden argues that calls for increased business taxation often create a divisive narrative without addressing broader tax design issues: "The conclusion is inescapable that (progressives) are not really interested in business paying its ‘fair share’... but in business paying 'more'..."
To read the full COST report, additional information is available online.
